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Debt, Wall Street, and a bull run

Coinbits's Photo
by Coinbits
Monday, May 11, 2026 - 21:38

The U.S. national debt held by the public surpassed the size of the entire American economy in March, hitting $31.27 trillion against a GDP of $31.22 trillion. This is the first time the country has crossed that line since 1946, when a record was set while demobilizing from the largest global conflict in human history. 

This time, as Maya MacGuineas of the Committee for a Responsible Federal Budget put it, the borrowing reflects "a total bipartisan abdication of making hard choices." CBO projects the U.S. breaks the all-time 1946 record of 106% of GDP in 2030, and reaches 120% by 2036.

As the fiat system racks up more debt, traditional financial institutions are stepping up their game when it comes to competing with bitcoin and crypto exchanges for retail and institutional users and clients.

24 hours separated Coinbase laying off 700 people Tuesday from Morgan Stanley flipping on spot bitcoin trading inside E*Trade Wednesday morning at 50 basis points. 0.05% makes it cheaper than Coinbase, Schwab, and Robinhood. Morgan Stanley advisors look after $9.3 trillion in client assets. E*Trade brings 8.6 million accounts, and Schwab manages another $10 trillion. 

Spreads, fees, and the entire brokerage layer of bitcoin are heading toward zero just as Washington’s fiscal runway tightens. Bitcoin’s dollar exchange rate broke through $80,000 this week and the bears are in retreat, but the real action hasn’t started yet. Once the money printer gets turned on, as it inevitably will, the conditions are in place for a bitcoin price breakout.

NEWS

Bitcoin treasury executives outline $3 trillion digital credit opportunity at consensus

At Consensus Miami this week, executives from Strive, Bitcoin Standard Treasury Company, Nakamoto, and Stack outlined a $3 trillion long-term opportunity in bitcoin-backed "digital credit" – perpetual preferred stock products that pay yield against bitcoin treasuries – a category that has scaled to roughly $10 billion in less than a year. 

Speaking on the same stage, Blockstream CEO Adam Back argued for bitcoin's simpler, security-first architecture, and noted that BlackRock's model portfolio bitcoin allocations "haven't taken effect yet."

A parallel financial system, no admin keys required

Roughly 200 bitcoin treasury companies exist globally compared to 5,000 banks in the United States alone. Capturing 1% of the $300 trillion global credit market would represent $3 trillion in demand – more than bitcoin's entire current market capitalization. The financial system is being rebuilt on top of bitcoin, without admin keys, without bank runs, and without a central authority that can freeze any of it.

Brussels considers "exit taxes" to stop high-net-worth Europeans from leaving the EU

A European Commission report quietly published in mid-April explores levying "exit taxes" on EU citizens ending their tax residence, including taxes on unrealized gains, as part of a broader wealth tax framework. Spain, Germany, and Ireland already operate variants of this regime; Brussels wants it harmonized across all 27 member states.

The right to leave is also a monetary phenomenon

Capital controls always start as "tail provisions to safeguard revenue." Bitcoin is the only meaningful asset a citizen can carry across a border without permission, intermediary, or a customs declaration, making it the ultimate hedge against exactly the policy creep Brussels just put on paper.

Strategy opens door to tactical bitcoin sales, eyeing a $2.2 billion tax shield

On its Q1 2026 earnings call, Strategy executives signaled a pivot from "never sell" to tactical bitcoin sales aimed at funding dividends, retiring debt, and growing bitcoin per share, with an estimated $2.2 billion tax shield available from selling higher-cost-basis tranches of its 818,334-coin stack. Saylor said the firm "will probably sell some bitcoin to fund a dividend just to inoculate the market" while remaining a long-term net accumulator.

From inventory to active capital

The world's largest corporate bitcoin holder is treating its balance sheet as productive collateral. The signal to the other 200 bitcoin treasury companies in the market is unambiguous – a serious bitcoin balance sheet enables more capital allocation options than fiat ever did.

Kraken and Moneygram link bitcoin to 500,000 cash pickup locations worldwide

Kraken announced a partnership with Moneygram giving its users access to nearly 500,000 physical locations across 100+ countries to convert bitcoin into local cash. Co-CEO Arjun Sethi said demand is being driven by users in regions with unstable currencies who already treat the exchange as a bank substitute.

A real off-ramp where banks have failed

Pairing global demand for storing their wealth outside of broken fiat currencies in bitcoin with half a million physical cash points means more people can hold their savings in bitcoin and live off it locally without needing permission from a domestic bank.

BITCOIN ADOPTION CONTINUES

Bitcoin treasury company Strive surpassed 15,000 bitcoins after purchasing an additional 444 coins for $33.9 million.

Bitcoin logged its best monthly performance in 12 months in April, gaining 11.87% as the recovery toward $100,000 builds.

Bitcoin miner Hut 8 refinanced its bitcoin-backed credit facility with FalconX, cutting its rate from 9% to 7% and freeing roughly $260 million in bitcoin collateral.

European bitcoin treasury company Capital B secured a $1.3 million investment from Blockstream CEO Adam Back to expand its bitcoin reserves strategy.

Scotland's Lomond School launched the "Satoshi Scholarship," a fully funded two-year tuition and boarding award open to global applicants and backed by bitcoin community donations.

The CME Group will launch cash-settled bitcoin volatility futures on June 1, allowing traders to hedge bitcoin price swings without taking a directional position.

The Bitcoin Policy Institute launched an international initiative with support from Xapo Bank to educate United Kingdom policymakers on bitcoin regulation.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Bitcoin as the foundation of a new digital identity infrastructure

Utah's recently introduced SB 275, the "Digital Identity Bill of Rights," puts a stake in the ground: digital identity belongs to the individual, not to a state, bank, or ID verification services vendor that scraped your driver's license into a database years ago. The bill prohibits compelled use of state-issued digital IDs, requires opt-in participation, and would let citizens hold and present credentials without phoning home to any central issuer every time they prove who they are.

It is the logical destination of an argument the Bitcoin Policy Institute has been building over the past year. In a paper on digital identity, BPI argues that the U.S. digital identity stack is broken because it is built on the false assumption that personal information is secret, and routed through the same profit-driven verification vendors that are themselves frequent sources of the breaches they claim to defend against. The result is hundreds of billions of dollars in fraud and a public conditioned to surrender ever more data for ever smaller interactions.

The fix already exists in open standards. Decentralized Identifiers (DIDs) let any individual or entity author identity claims without depending on a third party. Verifiable Credentials (VCs) let those claims be cryptographically signed, presented, and checked. To trust any of it, you need an anchor – a Verifiable Data Registry that nobody controls and everyone can audit. In BPI's framing, the bitcoin network is that anchor: no central operator, fully open source, neutral by construction, and already secured by the most expensive proof-of-work network ever built.

Bitcoin already serves as money the state cannot inflate. With these standards layered on top, it can serve as the root of trust for an identity layer the state cannot surveil. Utah just took the first legislative step toward both.

COIN CHECK

Which cryptographer's 1997 design for a proof-of-work system to combat email spam is cited in the bitcoin whitepaper and forms the conceptual basis for bitcoin's mining algorithm?

A. Adam Back
B. Hal Finney
C. Wei Dai
D. Nick Szabo

Check your answer at the end of the page.

FROM THE MEME POOL

Follow us on X for more fresh content

ANSWER

Answer: A. Adam Back. In 1997, Back published Hashcash, a proof-of-work scheme that required email senders to solve a small computational puzzle, making spam expensive at scale while keeping ordinary use effectively free. Satoshi Nakamoto cited Hashcash directly in the bitcoin whitepaper and adapted its core mechanism into the bitcoin mining algorithm, which now secures over $1 trillion of value with the same fundamental insight: you can use provable computational expense as an indicator of message validity.

Today, Back leads Blockstream and remains one of the most influential voices in bitcoin infrastructure – a 28-year career that started with solving the spam problem and now builds the rails for a parallel financial system.

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
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